Square Payroll vs Gusto: 2 Platforms Compared

If you are choosing between Square Payroll and Gusto, the useful question is not which one is better. It is which one fits the shape of your business, because a poor fit costs you every month, in fees or in extra work. Below I price each at 5, 10, 25, and 50 people, show what sits in each base plan and where each is genuinely stronger, and name the situations that point clearly to one or the other.

The first payroll I ever ran was for a small team where half the staff were hourly and every hour they worked lived inside a point of sale terminal. Every other Monday I exported a report, retyped the numbers into a payroll app, and hoped I had not fat-fingered a decimal. I got it wrong twice in the first quarter. Nobody was harmed and both corrections were small, but the experience taught me something that no feature grid teaches: the payroll product that wins is usually the one that already has your hours.

That is the honest frame for this comparison. Square Payroll and Gusto are both credible full-service payroll products for a US small business, both publish their prices on a public page, and both bill month to month with no contract. They are not, however, the same kind of purchase. One is a payroll module attached to a point of sale (POS) system used by restaurants, retail shops, and salons. The other is a payroll company that has spent more than a decade building HR and benefits around the pay run.

There is a right answer for a coffee shop with tipped staff, a different right answer for a salaried agency that wants handbooks signed, and a third for a company with people in three states and a tight budget.

Square Payroll vs Gusto at a glance

The structural difference shows up before you reach a single feature. Square sells one full-service payroll plan and one contractor plan, and that is the entire menu. Gusto sells three payroll tiers and moves capability upward through them. A flat menu means you never have to model an upgrade. A tiered menu means you can buy more later without changing vendors.

Origin explains most of the rest. Square Payroll grew out of a point of sale business, so it assumes hourly staff, tips, timecards, and uneven week-to-week hours. Gusto grew out of payroll and benefits, so it assumes documents to sign, insurance to administer, and an HR person or a founder acting as one. Both file your employment taxes, both run unlimited payrolls, and both let you cancel whenever you like.

Read that table for placement rather than presence. Three rows decide most purchases. Square includes multistate payroll in its only plan, while Gusto reserves it for Plus and Premium. Square captures timecards in the point of sale and the Team App, while Gusto sells time tracking as a paid add-on on Simple and includes it on Plus. And custom document signing, the thing that turns payroll software into something you can onboard with, exists on Gusto from Plus upward and does not exist in Square Payroll.

One more row deserves attention because it is unusual in this market. Square bills for people actually paid in a given month, and it bills after the month closes rather than in advance. For a business with a summer crew or a holiday crew, that is not a rounding difference. It is the difference between paying for a roster and paying for a payroll.

What Square Payroll and Gusto actually cost

Square Payroll costs less than Gusto at every headcount, and both price the same way: a monthly base fee plus a per-person fee. That makes them directly comparable, which is rarer than it should be in payroll. The table below runs published rates at four headcounts, and includes the contractor-only options because that comparison is lopsided enough to matter.

Three things fall out of that grid. First, the entry comparison is a clean $14 a month at any size, because the per-person fee is identical at $6 and only the base differs. That is $168 a year, which is real but rarely decisive on its own.

Second, the contractor comparison is not close at list price. Square charges no base fee, so a business paying 10 contractors pays $60 a month. Gusto closed its Contractor Only plan to new customers on October 1, 2026, so the same 10 contractors run through Simple at $109, a flat $49 gap at any size.

Third, and this is the number that actually decides most of these comparisons, the moment you need payroll in a second state, Gusto moves you to Plus and the arithmetic stops being close. At 25 people that is $380 a month against $185 on Square, a difference of $195 every month for capability Square includes as standard.

Time tracking alone does not force the upgrade, because Gusto sells it on Simple as a $6 per person add-on after a free trial, which keeps a 25-person team on Simple at $349 a month. When you model payroll software, price the tier and add-ons your requirements force you into, not the tier at the top of the page.

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The costs that sit outside the plan price

Neither headline number is the whole bill. Both vendors move meaningful functionality into add-ons and partner services, and the items below are the ones small employers most often discover after signing rather than before.

Two of those lines are bigger than they look. The Square scheduling row matters because the payroll plan includes clocking in and basic schedules up to 10 days out, but building schedules with time-off requests and shift trades, or locking down permissions, takes one of Square's paid software plans.

Square publishes those plans at $49 per location per month for Square Plus and $149 for Square Premium. If you run three locations and need real scheduling, that is a second subscription.

On the Gusto side, priority support is the one buyers underestimate: at 25 employees the add-on costs $105 a month on top of a $199 plan, which is more than half the plan again for faster answers.

What you get at the base plan

Both base plans do the core job: unlimited pay runs, calculated and filed employment taxes, year-end forms, and an employee portal. The differences are at the edges, and the edges are where a small employer gets surprised in month two.

Square wins the base plan on payroll mechanics for an hourly business. Timecards, tips, overtime, and labor cost reporting are all in the $35 plan, and multistate filing comes with it. Qualifying businesses can run payroll up to two business days before the pay date, and eligible team members who use Cash App can reach their pay two calendar days early through Instant Deposit.

Gusto Simple wins on the paperwork around the pay run. It files federal, state, and local payroll tax forms, covers employee self-service plus basic time off and holiday pay, and gives you an onboarding experience built for a company that hires salaried people and needs the forms to be right.

What Simple holds back is significant for hourly teams: time tracking and next-day pay cost extra as add-ons, and custom document signing and payroll in a second state start at Plus.

One base-plan detail is easy to miss and worth confirming before you migrate: local tax coverage. Square states that it supports payroll tax calculations and filings across all 50 states and the District of Columbia, and that employers can add work locations across local or state tax jurisdictions with taxes calculated, withheld, and remitted for each one. Gusto, for its part, states that its federal, state, and local payroll tax filing covers all 50 states.

Local coverage still varies by city, and both vendors keep state-by-state help articles that say which local taxes they file. Square's Ohio help article, for instance, says Square Payroll files municipal tax only for municipalities whose tax is collected by the Regional Income Tax Agency (RITA), the Central Collection Agency (CCA), or the City of Columbus.

If your employees work in a city or school district with its own income tax, find it in the vendor's state article and get any gap confirmed in writing.

Both platforms reviewed

Below is the case for each, written as though you were only going to buy that one.

Square Payroll

Square Payroll is the cheapest published full-service payroll in this comparison and one of the cheapest anywhere, and the price is not the most interesting thing about it. The interesting thing is what the single plan contains. Automated federal and state tax filings, multistate payroll, overtime calculation, and labor cost reporting all sit in the $35 tier, and there is no higher tier to climb into.

The point of sale connection is the real argument. Timecards from Square Point of Sale or the Square Team App flow into the pay run, and tips are calculated and imported with them, which removes the retyping step that produced both of my early payroll mistakes.

For a restaurant, bar, or salon that already takes payments through Square, the whole hours-to-paycheck path lives in one system. If you also run tip pooling, that consolidation matters more than the fourteen dollars a month you save.

The billing model suits uneven businesses in a way most payroll pricing does not. Square charges for people actually paid in a month, invoices after the month closes, and lets you pause the subscription for up to nine months with taxes still filed during the pause. A business that hires seasonal workers for a five-month stretch pays for the months it runs payroll.

The contractor plan takes the same logic further with no base fee at all, so a business paying five contractors pays $30 a month, which is a genuinely different price point from anything Gusto offers. If your workers are contractors, confirm they belong in that category first, because the IRS classification rules apply whichever product you buy.

Benefits are add-ons through partners rather than a native product. Square names SimplyInsured for medical, dental, and vision insurance and Vestwell for 401(k) plans, and contributions and deductions from both sync into the pay run. It also sells workers compensation as an add-on through an integrated provider. That is a reasonable arrangement for a small employer, but it is a narrower benefits story than Gusto tells, and Square publishes less detail about it.

The weaknesses are specific and worth checking against your own situation. Square documents four things it does not support: paying one employee who works in more than one tax jurisdiction, courtesy withholding (withholding tax where an employee lives when the law does not require it), multiple EINs (employer identification numbers) under a single Square Payroll account, and closing a location in one tax jurisdiction to open in another under the same EIN.

Square Payroll also has no HR layer: no custom document signing, no offer letters, no performance tools. And Square publishes no free trial, though it charges nothing until you pay your first employee.

Gusto

Gusto says it serves more than 500,000 businesses, and its appeal to a first-time payroll buyer is easy to see. Pricing is public at every tier, setup is genuinely self-serve, the employee experience is the best in this price band, and you pay nothing until you press the button that runs your first payroll, with no commitment and no contract. For a founder who has never run payroll, that combination removes most of the risk from the decision.

The Simple plan is a complete payroll product for a single-state team. It includes unlimited runs, full-service tax filing that covers federal, state, and local forms, employee self-service, and basic time off and holiday pay. What it does not include is built-in time tracking or a second state, and Gusto is explicit that Simple is the single-state tier.

Where Gusto separates itself is everything wrapped around the pay run. Plus adds multi-state payroll, time tracking, next-day pay, performance and compensation management, and the ability to send custom documents such as offer letters and handbooks for signature, which is the feature that turns a payroll tool into something you can onboard with.

Premium adds a named Premium Account Partner, built-in HR resources such as an employee handbook and Ask an HR Expert, Gusto Business Compliance for state registrations, and same-day and instant pay. Nothing in Square Payroll competes with the HR side of those two tiers.

Benefits are the other differentiator. Gusto sells health, dental, and vision alongside payroll, and if you already have a broker you like, it will integrate that broker for $6 per eligible employee per month on every plan. Deductions and contributions flow into the pay run without a separate system, which is the part small employers most often get wrong when benefits live somewhere else.

The weaknesses are all about tier placement. Multi-state payroll and time tracking are both included only from Plus upward, which doubles the per-person rate from $6 to $12, so at 25 people a single hire in a second state takes the bill from $199 to $380 a month. Time tracking alone can stay on Simple through the Time & Attendance Plus add-on at $6 per person after a free trial, which brings the same team's monthly bill to $349.

Support is the other placement cost. On Simple and Plus, priority support costs an extra $30 per month plus $3 per person, so both lower tiers wait in the standard queue unless you pay for it. And unlike Square, Gusto has no published mechanism for pausing a subscription through a slow season.

Where each one is genuinely stronger

Square Payroll is stronger when hours, tips, seasons, and state lines shape your payroll, and Gusto is stronger when signed documents and HR support do. Strip out the marketing and the real differences are few, specific, and easy to test against your own situation.

The multistate row is the one worth sitting with, because it reverses the usual pattern. The cheaper product here is also the one that includes the capability most small businesses grow into, while the more expensive product charges an upgrade for it. If you expect anyone to work across a state line in the next year, the comparison is $185 against $380 at 25 people, and no amount of HR polish closes a $195 monthly gap for a business at that size.

The honest counterweight is what happens to your paperwork. Square Payroll runs payroll and stops. It has no signed documents, no offer letters, no performance layer, and it will not help you prove that a handbook was acknowledged. Gusto carries that work from Plus upward. If your recurring pain is chasing signatures rather than calculating hours, the cheaper payroll product is solving the wrong problem.

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How to choose between Square Payroll and Gusto

Five questions settle this faster than any feature list. Answer them before you open either signup flow.

Whichever way you go, the mechanics of the move matter as much as the choice. Switching payroll companies is cleanest at a quarter boundary and cleanest of all on January 1, because quarterly employment tax returns have to reconcile to year-to-date totals and splitting a quarter across two systems means two partial filings that have to agree.

Export full pay history, confirm every state account number transfers, check how close each employee is to the taxable wage bases (the yearly earnings caps on some payroll taxes), and run one parallel cycle before going live. The IRS guidance on depositing and reporting employment taxes is the reference for what the new system has to get right.

And keep one thing in view regardless of which logo ends up on the invoice. The IRS is explicit that employers remain ultimately responsible for withheld income tax and for both halves of Social Security and Medicare, and that if a third party defaults the employer still owes the deposits and the returns.

The two service contracts differ on penalties. Gusto's terms cover the penalties that arise directly from its own late payment or filing, while Square's terms leave filing and payment as your responsibility. Either way, read the notices, reconcile your quarterly payroll tax filings, and treat the IRS position on outsourcing payroll as the baseline for how much comfort a service contract can actually give you.

Before you choose

FirstHR is an onboarding and HR platform, not a payroll provider, so it works next to Square Payroll or Gusto rather than competing with either. It covers onboarding workflows, e-signature on offer letters and acknowledgments, employee records, and document management, at a flat $98 a month for up to 10 people or $198 for 11 to 50.

Both vendors already include employee self-onboarding: Square on both of its plans and Gusto on every plan, with custom documents for signature from Plus. A separate layer earns its place mainly next to Square Payroll, whose payroll product has no document e-signature, or when you want offer letters and signed policies kept apart from the payroll vendor through any later switch.

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Frequently Asked Questions

Is Square Payroll or Gusto cheaper?

Square Payroll, at every headcount. Both charge $6 per person, so the entry difference is a flat $14 a month: $95 against $109 at 10 employees and $335 against $349 at 50. The gap widens sharply when a second state enters the picture, because that moves Gusto to Plus at $80 plus $12, which is $380 a month at 25 people against $185 on Square. For contractor-only businesses Square charges no base fee at all, while Gusto, whose Contractor Only plan closed to new customers in October 2026, bills contractors inside Simple from $49 a month.

How much does Square Payroll cost per month?

Full-service payroll is $35 per month plus $6 per person paid, and contractor-only payroll is $6 per person paid with no base fee. Both include unlimited pay runs and no long-term contract. Square bills for people actually paid and invoices after the month closes, and the subscription can be paused for up to nine months with taxes still filed. Paper W-2 and 1099 copies cost $3 per mailed form.

How much does Gusto cost per month?

Simple is $49 per month plus $6 per person, Plus is $80 plus $12, and Premium is $180 plus $22. The separate Contractor Only plan stopped taking new customers on October 1, 2026. Contractors now run through these plans instead, billed only in months when they are paid. Add-ons include priority support at $30 per month plus $3 per person on Simple or Plus, time tracking on Simple at $6 per person, and broker integration at $6 per eligible employee per month. Gusto charges nothing until your first payroll run.

Does Square Payroll handle multi-state payroll?

Yes, and it is included in the single plan rather than gated behind an upgrade, which is the biggest structural difference between these two products. Square remits and files with the applicable agencies for each state where you process payroll. Three limits are worth confirming first: it cannot pay one employee who works in more than one tax jurisdiction, it offers no courtesy withholding, and it cannot run multiple EINs under one Square Payroll account.

Does Gusto Simple include time tracking?

Not as standard. Time tracking is included from Plus at $80 per month plus $12 per person, alongside multi-state payroll and next-day pay. On Simple it is a Time & Attendance Plus add-on at $6 per person per month after a free trial, and Simple otherwise covers single-state payroll, tax filing, employee self-service, and basic time off and holiday pay.

For a 25-person hourly team, Gusto comes to $349 a month on Simple with the add-on, or $380 on Plus. Square puts clock in and clock out in the Team App and point of sale with no extra payroll charge, which is why hourly businesses often land there.

Can I use Square Payroll without Square Point of Sale?

Yes. Square confirms you can sign up for payroll without processing payments through Square and without using any other Square service, at the same $35 per month plus $6 per person paid. You do lose the reason many businesses choose it, since the timecard and tip import is what removes manual entry from the pay run. Without that, the comparison against Gusto comes down to price, tax coverage, and HR depth rather than integration.

Which is better for a restaurant or retail shop?

Square Payroll in most cases, because tips and timecards import from the point of sale, overtime is calculated automatically, and labor cost reporting sits beside sales in the same dashboard. Gusto is the better answer for a group that needs handbooks and offer letters signed, since custom document e-signature is a Plus and Premium feature that Square Payroll does not offer at any price.

Does using Square Payroll or Gusto make them responsible for my payroll taxes?

No. Under IRS rules the employer stays ultimately responsible for withheld income tax and for both the employer and employee shares of Social Security and Medicare, and still owes the deposits and the returns if a third party defaults. Gusto's terms do cover penalties caused by its own late payment or filing, while Square's terms leave that risk with you.

Both vendors publish broad coverage. Gusto says it files federal, state, and local payroll tax forms in all 50 states, and Square says its payroll tax calculations and filings reach all 50 states and DC, including work locations in local tax jurisdictions. Local coverage varies by city, so check yours in each vendor's state help article before migrating.